Bay Area cities fear cuts to redevelopment agencies would be devastating

By Katherine TamContra Costa Times

Posted:
01/07/2011 03:05:56 PM PST

Updated:
01/07/2011 03:05:56 PM PST

The possible elimination of nearly 400 redevelopment agencies statewide -- many in poor and blighted communities -- is sparking fear among Bay Area city and county officials who worry efforts to curb blight and revitalize downtowns will be stunted.

As part of his plan to plug the state's gaping $28.1 billion budget hole, Gov. Jerry Brown is reportedly considering closing redevelopment agencies. Brown has not talked specifics, but agencies are bracing for what could be another fight.

"Sacramento needs to solve their problems on the spending side, and stop taking money from cities, counties and redevelopment agencies," said Steve Duran, community economic development director for Richmond where property tax receipts for redevelopment are $18 million this year.

From the Contra Costa Centre transit village near the Pleasant Hill BART station to the new offices at the reopened Ford Assembly Plant on Richmond's waterfront, redevelopment has changed the East Bay's landscape by using property tax revenue to turn vacant lots and dilapidated buildings into shopping centers, offices and affordable housing.

The notion of shuttering redevelopment agencies has some scratching their heads. Much of the money for the next decade or more is pledged to pay debt service for bonds used to finance construction. For example, 65 percent of Contra Costa County's redevelopment funds is committed to making these payments. Richmond's figure is 83 percent.

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"There's very little money to be had in the near term," said Jim Kennedy, redevelopment head for Contra Costa County, which has five redevelopment zones serving 50,000 residents. "If they're looking at it as a short-term solution, they've missed the boat."

"We're not sure what (Brown) has in mind, but it would be unfair for the governor not to allow us the revenue stream to pay off our bonds," said assistant city manager Joe Sbranti in Pittsburg, the redevelopment agency in Contra Costa with the most property tax revenue at $31 million.

Brown's spokesman Evan Westrup did not answer specific questions about possibly closing redevelopment agencies, except to say more details about the governor's budget plan would be provided next week when the plan is released.

The move could mean more property tax revenue for other public services. School districts, for one, have long lamented what they say is insufficient spending on public education.

Some school officials were hesitant to opine until the governor unveils his plan. Superintendent Bruce Harter of the West Contra Costa school district is taking a wait-and-see approach. The Oakland school district is doing the same, but spokesman Troy Flint said in general, the district doesn't see the matter as a zero-sum game.

"The issue is more complex than it seems," Flint said, adding redevelopment agencies can benefit school districts by reducing blight and creating jobs.

Santa Clara Unified School District Superintendent Steve Stavis said eliminating redevelopment would mean about $35 million -- about a 25 percent funding increase -- for his district.

"Could I use the $35 million to support the education of our kids? Absolutely," Stavis said.

The state would likely face hefty opposition. In 2009, the Legislature demanded $2.05 billion from redevelopment agencies to funnel to schools. Sacramento Superior Court ruled the move was legal; the California Redevelopment Association is appealing. In November, voters approved Proposition 22 to stop state raids on redevelopment and other local money. It's unclear if a public vote would be required to do away with redevelopment agencies.

Oakland City Administrator Dan Lindheim is waiting for more details about Brown's plan.

"It's an interesting proposal from ex-Mayor Brown, because every one of his projects that he has ballyhooed and was able to achieve were redevelopment projects, like the 10K plan (the revitalization of downtown Oakland by building new housing for 10,000 new residents), the Fox Theater restoration and the School for the Arts," Lindheim said. "His efforts to make Oakland safe for condo developers was done with redevelopment money."

Big-dollar projects would be shelved if the agencies end, officials say; there isn't enough in the general fund to finance large-scale developments. The projects create jobs and attract other developers to invest, all of which would be lost, they say.

In Oakland, where the redevelopment agency projects $109 million in property tax receipts this year, eliminating all redevelopment funding would spell the end of any new ballpark plans for the Oakland A's. It also would put at risk several other committed development projects vital to the city's economic health, such as the MacArthur Village. That project alone requires $6.3 million in redevelopment bond funds this fiscal year.

San Pablo's vision for a better Davis Park with new ball fields, trails and a community center building would be derailed. Fremont leaders are counting on redevelopment dollars to revitalize hundreds of acres surrounding the old NUMMI auto plant.

In Union City, where officials last month unveiled the first phase of its intermodal station as part of a green, pedestrian-friendly downtown, Redevelopment Manager Mark Evanoff said Brown's reported idea would prevent more affordable housing units from being added to the 449 that have been built. It would also halt construction of a public plaza and pedestrian path to the station.

"It's expensive to build transit hubs, and you need a dedicated source of funding such as redevelopment to make it happen," he said.

Berkeley is one of the few that would not be heavily affected because its agency expires Dec. 31, 2015. Officials aren't planning anymore capital projects after 2011 and have already eliminated a staff position in preparation. The remaining three years' worth of funds, which is about $1.5 million annually, will be used to pay off debts.

Gov. Jerry Brown says he is eliminating the secretary of education's office, slashing the governor's office by a quarter and giving back most of the money budgeted for his transition. The Democratic governor said Friday that all the savings add up to $7 million. Brown says he only spent $120,000 of the $770,000 allocated for the changeover from Gov. Arnold Schwarzenegger. Brown says he's trimming $4.5 million from his own budget by cutting staff in the Washington, D.C. office; closing field offices San Diego, Fresno and Riverside; and cutting communications staff. He also says he'll eliminate the first lady's office. Brown already announced that his wife, Anne Gust Brown, will serve as an unpaid adviser.